Compliance Costs of Individual Income Tax Laws in India and US: An Empirical Evidence

Abstract

In the present study, an attempt has been made to estimate the compliance costs borne by individual income taxpayers in India and Federal US, besides tracing the reasons why taxpayers avail services of tax professionals for filing tax returns. For most of the tax compliance activities considered in the present study, a monetary burden of upto Rs. 1000 (upto $23.61) has been observed for the Indian respondents as against a burden of up to $50 for the US taxpayers. For the respondents of both countries, time burden for tackling income tax issues varies between 26 to 50 hours. On studying the different reasons governing the use of professionals services, it has been observed that Indian taxpayers are more concerned about the mistakes in filing of tax documents and frequent changes in tax-laws. However, the tax law complexity has emerged as a main concern in United States.

Keywords

Compliance Cost Compliance Chi-Square Analysis Income Tax

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